Mexican City's Residents Reject Constellation Brewery in Referendum
March 23 2020 - 11:10AM
Dow Jones News
By Santiago Pérez
Residents in the border city of Mexicali voted against the
completion of a $1.4 billion brewery owned by Constellations Brands
Inc. on grounds that its intensive water consumption was
detrimental for the community, a move that risks undermining
foreign investment in Mexico as the country faces a deep economic
contraction.
The administration of nationalist President Andrés Manuel López
Obrador organized the public consultation on Saturday and Sunday.
Farmers had complained that Constellation's water-intensive plant
threatened to intensify irrigation shortages in the agriculture
sector.
Around 76% of those who voted rejected the project developed by
Constellation, the third-largest U.S. beer producer and brewer of
Mexico's Corona and Modelo brands for U.S. consumers. Turnout was
less than 5% of eligible voters.
As a result of the vote, the government won't grant a water
supply permit to Constellation Brands, Deputy Interior Minister
Diana Alvarez said on Monday. The federal government will soon
begin talks with Constellation to look for compensation for
incurred losses, Ms. Alvarez said, after disclosing the results of
the referendum.
The cancellation of such a large-scale project sends a negative
signal to foreign investors, business groups say. This is the first
time Mexico's government has put a big foreign investment project
to a public referendum, even as foreign direct investment shrank
last year and the country's economy is expected to nosedive as the
world is engulfed by the coronavirus pandemic.
Fixed investment in Mexico fell 4.9% last year from 2018,
contributing to a mild contraction in economic activity. Economists
polled Friday by local bank Citibanamex expect gross domestic
product to contract 3% in 2020, compared with an estimate of 0.7%
growth just two weeks before.
(END) Dow Jones Newswires
March 23, 2020 10:55 ET (14:55 GMT)
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